I split my time between the East Coast and West Coast. Last month, I guess the rain in the northeast was getting to me.  Seemed like between the August rain and all the bad economic news in the media, it was hard to find a lot to smile about.  But I did manage to find something, and it had to do with the fact that commercial scores were actually starting to tick higher. 

Well, it’s a new month, new quarter, and while the weather in the Northeast may not be any better, I am back in lovely North San Diego County, and the weather couldn’t be any better.  PLUS, it looks like the hammerlock the “gloomy Gus’s” had on the media is lessening as well.  So, while the news isn’t necessarily great, it isn’t awful either.  The National Federation of Independent Business just released their latest survey, and small business optimism actually ticked up ever so slightly in September.  But, the key thing is, that for the first time in 6 months, it didn’t decline.  What was also interesting was that “credit problems” were the number one issue for only 4% of the respondents.

We can couple that with Experian’s latest benchmark report, which shows that average commercial risk scores held firm for the third quarter.  And bankruptcy filings have also leveled off, at least through mid-year which is the latest data I’ve seen.

We are not out of the woods yet, and far be it from me to make any kind of prediction.  Maybe it’s because the sun is shining here, but I’m thinking things might be on the cusp of getting better…again.  I will be interested to see what the economic world looks like one year from today.  It seems like the sun may be shining a little brighter by then too.

Ok, that is a loaded question. We can take a look at many things, and say, “yea, with all the bad news coming out, of course small business owners are losing confidence”.  The NFIB confirms that with their latest report. Reasons cited?  What else….inflation fears brought on by higher gas prices, and high unemployment. 

But wait … aren’t gas prices going down?  Oh, that’s right.  They may be going down, but they are still up substantially from even six months ago.  I recently heard Warren Buffett suggest that when construction activity turns positive, then the economy will get going.  Well, not exactly what he said, but since we have made the connection between employment uncertainty and an improving economy, I guess I made the assumption that one follows the other.

Ok, I am not in a position to disagree with Mr. Buffett.  But really?  It seems to me or in my humble opinion (IMHO…learned this one from my kids) that the issue is bigger than that.  Again, IMHO, that would say that the majority of those unemployed are tied to the construction industry somehow…but what about workers let go from financial services firms or those whose manufacturing jobs were offshored?  I am not seeing how improvements in the housing picture get them back to work.  Or the small business guy who can no longer compete with the big box retailer?

Anyway, far be it from me to disagree with Mr. Buffett, but I guess I’d like to ask him for a little clarification.

So, sometimes it takes a little while for the popular press to catch up.  I say that because on June 14th, an article ran on msnbc.com talking about, of all things a “Tale of Two Economies”.  Well, if they had seen our blog on May 18, they would have seen that we could have told them that a while ago.  At the time, our data (going as far back as March) was showing there were two distinct sets of economic conditions. In fact, in our view, the big business community was actually thriving, partially at the expense of the small business guy.

On what basis did we make that determination?  Payment deterioration.  We were seeing about a 5x incidence of severe payment delinquency among small businesses as we saw among large businesses.   But to add to that, nearly 60% of all small business delinquent dollars were stretching to severely slow, while less than 10% of the large business delinquencies were going to that extreme.

 The msnbc.com article, based on AP and Reuters contributions,  quoted a survey by the National Federation of Independent Businesses (NFIB) as having seen a 3^rd straight month of decline in optimism.  The reason?  Weak optimism was due to the weakness of the recovery.  Our position was that opening up lending to small business would be a big help, given the fact that large businesses were putting a strain on small business cash flow by extending their payments to the small business community.    

 June 17th on CNBC’s Squawk Box , Jim Rohr of PNC Bank, indicated that in Q1, almost a billion dollars in small business loans were made.  This was up significantly from the past.  That trend is continuing into the second quarter.  Mr. Rohr feels that this should inject some added optimism into the small business community.  Hopefully he is correct.

We need it.

Macro-economic information can often be one of the most important sources of data when setting a company’s strategies. Yet, this data is not always timely or that accessible. Whether you are reviewing the optimal staffing level for your firm in the coming year, or determining how much inventory to purchase, it is essential to understand what is happening at the core of the economic environment. Below are a few sources of valuable information that can help provide a glimpse into the current state of the businesses in the U.S.

1)      The U.S. Department of Labor’s Bureau of Labor Statistics provides interesting information on inflation, unemployment, pay & benefits and productivity among other key data.

2)      The U.S. Small Business Administration is a valuable resource to small business owners.  The site provides access to tools, resources and training aimed to help small business owners.  The site also provides research and reports that can have valuable pieces of economic information.

3)      The Federal Reserve Board has numerous areas of financial information.  The Fed publishes many statistical reports on the banking industry, but they also cover inflation, consumer finance information, home mortgage trends and the impact on home prices.  These reports often provide visibility into the macro-economic forces that are driving the economy. 

4)      Experian’s quarterly Business Benchmark Report provides a quarterly view into the financial position, risk, and payment behaviors of the 25 million+ businesses in the U.S.

Utilizing these tools can help you evaluate your strategic direction in the coming months. If there are any other interesting sites you’d like to share, please feel free to comment with additional resources you find helpful.